Counterfeiting undermines American growth***
Lewis 9 (Kevin, “The Fake and the Fatal: The Consequences of Counterfeits”, 2009, https://www.iwu.edu/economics/PPE17/lewis.pdf)
The existence of counterfeiting also serves as a disincentive to innovation. Because counterfeiters don’t have to “recoup research and development costs” incurred in inventing new products or processes, counterfeiters “can enter the market with a similar product in less than 2 percent of the time and less than 1/1000 of the cost” (Hopkins, 2003). In the presence of widespread counterfeiting, innovators have a minimal incentive to expend the effort and resources necessary to produce beneficial new technologies, because counterfeiters can profitably misappropriate these new ideas and make it increasingly difficult for innovators to recover their expenses. Moreover, the prevalence of counterfeiting has forced businesses to divert R&D resources away from creating new technologies and into methods to deter counterfeiters. Respondents to a study conducted by the Organization for Economic Cooperation and Development “spent over half their R&D investment on anti-piracy technologies and product differentiation” as a response to the increasing incidence of counterfeiting in the global economy (Teresko, 2008). In this way, counterfeiting impedes technological progress, discourages economic growth, and hinders improvement of the standard of living in the United States.
U.S. goods are susceptible to counterfeiting
Lewis 9 (Kevin, “The Fake and the Fatal: The Consequences of Counterfeits”, 2009, https://www.iwu.edu/economics/PPE17/lewis.pdf)
Counterfeiting harms not only individual consumers and businesses, but also the United States as a whole. The trade of counterfeit goods is clandestine in nature, and transactions frequently occur off the books. Therefore, the United States government cannot collect taxes off of counterfeiters’ sales and profits. Were it not for the presence of counterfeit goods in the marketplace, consumers would buy goods from taxable, legitimate businesses. Counterfeiters thus deprive the government of tax revenues, leaving less money to fund schools, hospitals, roads, parks, fire and police forces, and other desirable public amenities (White Paper, 2005).
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